In today’s world, where consumers purchase products not based on quality or usefulness, but instead are carried away by the brand name and trade symbol which accompany the product, protection of the distinctiveness of a trademark is of the utmost importance. Trademark dilution is a claim which the owner of a famous trademark can make to prevent others from using a mark which decreases the value or distinctiveness, or tarnishes the reputation, of the famous mark. Many scholars argue on whether trademark law should even recognize such a concept.

Traditionally, to forbid another from using a mark, one had to prove that there is a ‘likelihood of confusion’ that may arise, which would cause one to believe that the goods being sold are those of another. By recognizing trademark dilution, the reputation or distinctiveness of the mark is protected even if there is no scope for confusion.

Types of Trademark Dilution

It is necessary here to define the two types of trademark dilution, namely, blurring and tarnishment. In Mead Data Central v. Toyota the Court held that blurring includes, ‘the whittling away of an established trademark’s selling power through its unauthorized use by others upon dissimilar products’. A mark is said to be tarnished when the impugned mark links such mark to products that are of poor quality or which portray such mark in an unwholesome or unsavoury context that is likely to reflect adversely upon the owner’s product.

Doctrine of Trademark Dilution in India

Indian Courts had recognized trademark dilution, as early as the early 1990s, but without providing any analysis of the doctrine in their judgments. In Daimler Benz Aktiegesellschaft vs Hybo Hindustan one of the issues before the single judge bench was whether the defendant could use the mark ‘BENZ’ on underwear. Interestingly, the Hon’ble Judge applied the doctrine of dilution without using the word ‘dilution’ even once in the entire judgment, which consisted of less than 1,700 words. However, the Hon’ble Judge used the word ‘dilute’ once, towards the end of the judgment while stating ‘In my view, the defendant cannot dilute, that by user of the name “Benz” with respect to a product like under-wears.’ The judgment focused only on the great injustice that would be done if the defendant were allowed to continue to use the mark and absolutely no analysis of dilution or any related legal principle was made.

The Hon’ble Judge stated in the judgment as under:
I think it will be a great perversion of the law relating to Trade Marks and Designs, if a mark of the order of the “Mercedes Benz”, its symbol, a three pointed star, is humbled by indiscriminate colourable imitation by all or anyone; whether they are persons, who make undergarments like the defendant, or anyone else. Such a mark is not up for grabs — not available to any person to apply upon anything or goods

The Delhi High Court analyzed the doctrine of dilution to some extent in ITC Limited vs Philip Morris Products SA and Ors. Wherein the Court held as under:
It may be seen …. that dilution of trademark is a species of infringement. Though trademarks are concerned with protection of marks which have acquired a degree of distinctiveness, in relation to particular goods and services, courts have, over the years recognized that in relation to marks which have achieved notoriety as to have a reputation about the quality of products which the manufacturer, or services the originator (of the mark) is associated with, then, even in relation to dissimilar goods – or unrelated products, protection of such brand name, mark or acquired distinctiveness is essential. This measure of protection to marks in relation to similar junior marks, but for dissimilar goods is, in substance the protection against dilution (or Blurring or tarnishment) of the mark.

The Court, while referring to section 29 (4) of the Trade Marks Act, 1999 (the Act), recognized the essentials for dilution as under:
(1) The impugned mark must be identical or similar to the injured mark;
(2) The one claiming injury due to dilution must prove that her/his mark has a reputation in India;
(3) The use of the impugned mark is without due cause;
(4) The use of the impugned mark (amounts to) taking unfair advantage of or is detrimental to, the distinctive character or repute of the registered trade mark.

Here, the Indian Courts have taken a more lenient view than U.S. Courts. The judgment merely states that the mark must have ‘a reputation in India’, whereas according to US law the mark must necessarily be famous. The reputation of the mark is of great significance. The user of a mark that is even averagely well known cannot claim dilution of that mark. Distinction needs to be made between a ‘famous’ mark and a mark with ‘reputation’. The reasoning behind this is simple, dilution rights being indeterminate in nature, the standard of fame required to claim them must be high as well. A mark which is not highly distinct cannot be diluted. It is also unclear whether a mark which has reputation in a particular sector of the public or only in a particular area within India would also be entitled to protection from dilution, within that sector or area. In U.S.A. there is a specific legislation dealing with the subject known as the Trademark Dilution Revision Act (TDRA) of 2006. This Act has stated that while determining whether the impugned mark satisfies the ‘required degrees of recognition’ it shall take into account the following factors:
(i) The duration, extent, and geographic reach of advertising and publicity of the mark, whether advertised or publicized by the owner or third parties.
(ii) The amount, volume, and geographic extent of sales of goods or services offered under the mark.
(iii) The extent of actual recognition of the mark.
(iv) Whether the mark was registered under certain previous Acts or in certain registers

This TDRA also states that it is not necessary that one must prove actual dilution in order to make a claim of dilution. The Act came after the U.S. Supreme Court and a district court refused to grant an injunction in the ‘Victoria’s Secret Case’ (V Secret Catalogue Inc v. Moseley) on the grounds of lack of evidence of blurring or tarnishment. Mere likelihood of dilution is adequate to prevent another from using the impugned mark.

The Delhi High Court while stating essentials of a claim of dilution simply stated that the mark must be detrimental to the distinctive character or reputation of the registered trade mark. The factor of burden of proof was not dwelled upon. Furthermore, Section 24 of the Act states that the mark must take unfair advantage or be detrimental to the registered mark. The scope of this provision is very wide. Section 2(3) of the TDRA lays down exceptions to trademark dilution as under:

“The following shall not be actionable as dilution by blurring or dilution by tarnishment under this subsection:
(A) Any fair use, including a nominative or descriptive fair use, or facilitation of such fair use, of a famous mark by another person other than as a designation of source for the person’s own goods or services, including use in connection with–
(i) advertising or promotion that permits consumers to compare goods or services; or
(ii) identifying and parodying, criticizing, or commenting upon the famous mark owner r the goods or services of the famous mark owner.
(B) All forms of news reporting and news commentary.
(C) Any non-commercial use of a mark.
Such an exception cannot be drawn from Section 24 of the Act and the word ‘detrimental’ can mean to include even parodies, criticism or comments. The exception of parodies was used in Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC , where the defendant’s manufactures apparels for dogs under the mark ‘Chewy Vuitton’ which was parodying the famous brand of ‘Louis Vuitton’ apparels. It was held in that case that ‘Chewy Vuitton’ did not dilute the trademark ‘Louis Vuitton’ because it was merely a parody of ‘Louis Vuitton’.

Conclusion

It is therefore humbly submitted that trademark dilution, even though it is not a consumer-centric law, must be openly adopted in Indian trademark Law. A separate legislation may not be necessary, amendments to the Trade Marks Act, 1999 should suffice and may even be better. Section 24 must be amended to change the scope of the provision by not including all marks with reputation but only covering famous marks, thereby excluding marks which are simply ‘well-known’. Criteria to be considered to determine whether or not a mark is famous, such as those criteria set out in the TDRA can be adopted.

An exception to criticisms, parodies and comments needs to be made. The wide scope of Section 24 of the Act can lead to misuse of the provision by users of famous marks. This is dangerous considering the fact that the users of famous marks are generally corporate giants who may use the wide protection granted to them under Section 24 to bully smaller businesses.

As to the burden of proof, the user of the famous mark need prove actual dilution. Likelihood of dilution should suffice. However, the burden of proving that the famous mark is indeed ‘famous’ should lie on the user of such mark.

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Raja Selvam

Founder & Managing Attorney, Selvam & Selvam | Practice areas include Trademarks, Patents, Domain names & Business law. Visiting faculty, Department of Journalism, Madras University where I teach copyrights & trademarks law. Passionate about entrepreneurship, start-ups, stocks, farming, technology and law.